MannKind Loss Shrinks - Analyst Blog

MannKind’s (MNKD) first quarter fiscal 2010 net loss per share declined to 40 cents, compared to a loss of 58 cents in the first quarter of 2009. The Zacks Consensus Estimate was pegged at a loss of 44 cents per share.

MannKind does not have any marketed products, and hence does not generate any revenues. MannKind filed a New Drug Application (NDA) for its lead pipeline candidate Afrezza, inhaled insulin for the treatment of type I and type II diabetes, with the US Food and Drug Administration (FDA) in March 2009.
 
However, the approval has been delayed with the FDA issuing a complete response letter (CRL). The agency has asked the company for additional information and clinical data. To sort out these issues, the company plans to meet with the FDA.

The primary reason behind the lower loss was a 29.8% year-over-year decline in operating expenses, which came in at $40.6 million. While general and administrative (G&A) expenses declined 32% to $10.11 million, research and development expenses recorded a 29% decline to $30.5 million due to reduced costs associated with the development of Afrezza after its NDA submission. G&A expenses were lower due to reduced salary-related expenses resulting from workforce reduction.

At the end of the reported quarter, MannKind had cash and cash equivalents of $29 million, marginally down from $30 million at the end of Dec 2009.

Although we believe that Afrezza offers distinct advantages over the traditional needle-based insulin therapy that currently dominates the market, the path to approval is not easy. Many large pharmaceutical companies in the past have made unsuccessful attempts to launch such a product.

MannKind was looking towards striking a partnership deal for Afrezza. However the delay in FDA approval will further hinder any such possibility. Meanwhile, the company is developing its other programs such as cancer immunotherapy and cancer drug programs, which recently reached significant data milestones. MannKind has now decided to seek collaboration partners for its cancer programs.

We have a Neutral recommendation on the stock.

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